Kitimat refinery would have huge positive impact on B.C. economy

Jim Shepard, Special to The Vancouver Sun04.01.2013

Newspaper publisher David Black holds a jar of raw bitumen during the August news conference where he unveiled a proposal to build a petroleum-products refinery in Kitimat.DARRYL DYCK
/ THE CANADIAN PRESS

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I first heard about the idea of building a refinery at Kitimat from David Black a number of years ago. At the time I was skeptical of its chances.

My initial negative attitude was based mainly on my experience of 10 years’ service on the board of directors of Imperial Oil. Since I was accustomed to the discussion of petroleum economics centred in Calgary, I saw no need for a refinery in Kitimat.

That thinking was based on the fact that there had not been a new refinery built in North America in many years. And any needed increase in petroleum production was achieved by expansion of existing refineries throughout North America. But after my service with Imperial Oil, I went on to serve four years at Canfor, which led to my nine visits to China in search of lumber markets.

My exposure to the phenomenal expansion of China’s economy opened my eyes to the true merit of the Kitimat refinery concept. It made me realize it would not be just another refinery relying on the North American market but rather a refinery that would supply the vast appetite of China for petroleum products. The challenge will be to draw the attention of Asian investors who would see the value to this investment. It appears that David Black, after many years of effort, is nearing an agreement that could provide the vast capital infusion needed to make this refinery initiative a reality.

The appetite for oil products for all Asia will continue to grow and the Kitimat refinery is ideally situated to take advantage. Asian countries, especially China, are very interested in securing a sustainable supply of resources that will flow freely without undue trade barriers. Canada has a good reputation as a free trade country that can be relied on as a dependable source of supply. Now is an opportune time to attract the vast investment needed to make the Kitimat refinery go ahead. David Black, with his years of diligence, deserves our appreciation for displaying the foresight and courage to invest his time, money and reputation to this huge initiative.

The positive merits of the Kitimat refinery are so profound that this project is beyond any political persuasion. All supporters of NDP, Liberal, Conservative or even Green parties should see the tremendous benefits that would come to B.C. with this project.

This initiative will involve the investment of many billions of dollars. It’s hard for any of us to visualize a million let alone a billion of any thing. So let’s look at the “ on the ground” facts of such an undertaking for all of us in B.C.

When it comes to the benefits of a petroleum cycle from well exploration to the gas station, the jurisdiction that hosts the refining process enjoys a huge portion of the value addition to the raw material. For the refinery project, that would mean several thousand mostly trade union jobs for the multi-year term of the construction phase. It would also mean the creation of over 3,000 permanent jobs for the operation and support of the refinery when running.

This refinery would be processing 175 million barrels per year which means the tax revenue that could go toward health care, education and vital services for the disabled and elderly would be immense.

But job creation and tax revenue is not the only desirable feature of the Kitimat refinery project.

It also would provide much lower risk to the marine environment. The shipments out of the refinery would be finished product like aviation fuel, gasoline and diesel. These products, if ever spilled, would have a less harmful impact on the marine environment than bitumen. They would also be transported in smaller ships.

Based on the huge positive impact this initiative could have on B.C., I think the question should not be if we want it but, rather, how can we help make sure that the petroleum world sees this as an attractive way to invest billions of shareholder capital.

Jim Shepard is the former CEO of Finning and Canfor.

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